Feinstein's Office Denies Conflict of Interest Charges

By Fred Lucas | July 7, 2008 | 8:32 PM EDT

(CNSNews.com) - Breaking nearly a week of silence, Sen. Dianne Feinstein's office Tuesday called allegations of a conflict of interest "nonsense" and said the California Democrat played no role in awarding military contracts that benefited companies owned by her husband.

It was reported last week that Feinstein no longer serves on a Senate subcommittee that oversaw military construction.

Earlier this year, Metro Newspapers accused Feinstein of a conflict of interest because the subcommittee had oversight of military contracts that often went to defense contractors owned by her husband, Richard Blum.

Feinstein's departure from the Senate subcommittee on military construction appropriation, also called MILCON, had nothing to do with reports in the Silicon Valley weeklies, said Feinstein spokesman Scott Gerber. In fact, she had already left the panel before the reports were published in late January.

"It is nonsense to suggest Sen. Feinstein resigned from the military construction subcommittee," Gerber told Cybercast News Service Tuesday. "At the beginning of Congress, following the historic shift in power, Sen. Feinstein had the opportunity to be the chair of the interior appropriations subcommittee."

This Senate panel offered her more ways to help the state of California, Gerber said, adding, "She is still on the full defense appropriations subcommittee."

Feinstein's service on the committee never presented a conflict of interest, Gerber said, because she didn't have the power to direct contracts to her husband's business or any other company.

"Sen. Feinstein never sought to award military contracts," Gerber said. "That procedure is done by the defense department. Congress plays no role in that process."

That's only technically true, said Kenneth Boehm, chairman of the National Legal and Policy Center, a conservative government watchdog group. He said Tuesday it was disingenuous for Feinstein's office to claim she had no role in awarding contracts.

"The Pentagon does award contracts, but when the Pentagon wants money it goes to the appropriation subcommittees in the House and Senate for money," Boehm noted. "It's hard to imagine a more textbook example of a major financial conflict of interest."

When the Pentagon or any federal agency submits its wish list to Congress, Boehm explained, the appropriations committee members select which programs and projects are funded and often have knowledge of what companies might be suited for the project based on geography, specialization and other factors.

This is well known on Capitol Hill, he said.

"To say she didn't actually do the contract is fall-down-laughing material," Boehm said.

Metro Newspapers first reported in late January several instances in which Feinstein seemed directly involved in issues that could benefit Perini Corp. and URS Corp. Her husband has ownership in both, according to the newspapers.

The examples include a subcommittee hearing where Feinstein asked Pentagon officials about increasing anti-terrorism protection for army bases.

The next year, in March 2003, Feinstein asked why the funds for anti-terror protection had not been spent. Just over a month later, URS announced a $600 million contract to provide services for U.S. Army bases that include anti-terrorism force protection.

In another instance, Feinstein asked another military official when money would be spent on a maintenance facility for the C-17 Hickam Air Base in Hawaii. URS later announced a $42 million contract to build it.

Also, Feinstein's subcommittee in mid-2005 approved funds to reinforce roofs at military stations in Iraq, and in October of that year, Perini got a $185 million federal contract for that purpose, the papers reported.

Feinstein at the very least had knowledge about what the military wanted and when, said Chris Farrell, research director for Judicial Watch.

The conservative group is working on a complaint to the Senate Ethics Committee and a freedom of information request to the U.S. Department of Defense.

"She had a preview of what was coming down the pipeline," Farrell told Cybercast News Service. "It's a sneak preview for him [Blum]. It's like ordering off a menu."

Feinstein chairs the Senate Rules Committee, which sets both procedural rules and ethical guidelines for members.

See Earlier Story:
Feinstein Leaves Senate Defense Panel Amid Controversy (April 2, 2007)

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